Risk of sharp market correction is low: Rajkumar Singhal, Quest Investment

Stock market outlook: A new high in markets before the end of 2025 looks well within reach, provided earnings deliver and global stability holds, says Rajkumar Singhal, CEO, Quest Investment Advisors

Indian stock markets have staged a remarkable rebound from March lows, rising nearly 15 per cent during the period. With D-Street eyeing a India-US trade deal, and corporate earnings for the June quarter, RAJKUMAR SINGHAL, CEO, Quest Investment Advisors, tells Nikita Vashisht in an email interview that an all-time high for the markets is well within reach in 2025. Edited excerpts:  

What is the bext big trigger for the markets? Will we see fresh record highs before the end of 2025?

Globally, the July 9 deadline for the expiry of US tariff concessions looms large. The US Federal Reserve is closely watching inflation dynamics—especially any impact from tariffs—before resuming the rate cut cycle. Additionally, the Trump presidency adds another layer of unpredictability.

 

Domestically, with the recent cut in cash reserve ratio (CRR) and repo rate, RBI has already front-loaded much of its easing. While there may be one or two more rate cuts left, these are likely to be staggered. Liquidity conditions remain extremely accommodative, which should support credit growth and investor sentiment.

 

The biggest near-term trigger will likely be earnings recovery in Q1 and Q2 of FY26. Strong earnings rebound would make valuations more palatable and trigger sustained inflows from both domestic and global investors. Considering the Nifty 50 is currently within 3 per cent of its all-time high, a new high before the end of 2025 looks well within reach—provided earnings deliver and global stability holds.

How should investors tweak their portfolios ahead of Q1FY26 earnings? 

Consensus estimates for Nifty EPS point to 11-12 per cent earnings growth in FY26 which, we believe, will be sector-driven. In Q1FY26, strength could be visible in Telecom, Metals & Mining, Oil & Gas, Consumer Discretionary, Healthcare, and Travel.

 

Conversely, IT, Banking, and Consumer Staples may underperform due to global slowdown, margin pressures, and rural demand weakness.

 

Ahead of earnings, we are Overweight on consumer discretionary, healthcare, NBFCs/HFCs, and travel & tourism sectors. We would advise investors to focus on capex-linked plays, especially in power and industrials, and remain selective in IT.

Do you expect Indian markets to see a price correction given the stretched valuations?

Valuations have certainly expanded over the last three months due to a P/E rerating, but with multiple macro tailwinds now in place—such as declining inflation, solid FPI flows, political stability, and strong domestic liquidity—we believe the risk of a sharp correction is low. Any minor correction should be seen as a buying opportunity, especially if earnings recovery continues as expected in H1FY26.

Have you seen a slowdown in investment by HNIs amid global caution and rupee depreciation?

There has been a moderate slowdown in incremental allocations by HNIs as reflected in the softer inflows into mutual funds and PMS vehicles over the past quarter. However, this is likely to be temporary and should reverse with greater clarity on global rates and inflation.

 

How are you reading Sebi's latest order to allow co-investment opportunities directly within the structure of Alternative Investment Funds?

Sebi's move to permit co-investments within AIFs is a progressive step. It allows investors to access specific deals alongside the AIF manager, improving transparency and offering customization. This also aligns with global best practices and gives fund managers more flexibility in structuring deals and aligning interests with investors.

 

Does the industry need more regulations?

The PMS and AIF industry is well-regulated. Sebi has introduced comprehensive disclosure requirements which have increased transparency and investor trust. There is no strong case for further regulatory tightening. Instead, the focus should be on implementation efficiency and regulatory clarity, not adding more layers.

 

How has Quest Investment's H1 2025 been? What is the road ahead?

H1 2025 has been a period of disciplined portfolio positioning for us. Despite external volatility, our portfolios have benefited from selective exposure to capex-led themes, power, and consumption. Looking ahead, we continue to be focused on identifying long-term secular trends.

 

Do you think the minimum investment threshold for PMS/AIFs should be lowered from Rs 50 lakh to allow retail investors to tap the segment?

While PMS and AIFs are not mass retail products, the Rs 50 lakh threshold is restrictive and limits access to less than 1 per cent of Indian savers. With Sebi’s SIF category now allowing ticket sizes as low as Rs 10 lakh, there is a strong case to bring PMS/AIF eligibility closer to that threshold—perhaps Rs 25 lakh—to make the category more inclusive while still ensuring investor suitability.

 

What is the outlook for the PMS/AIF industry? Is it in a consolidation phase or does it have space for more players?

The PMS/AIF industry has ample room for growth. With rising affluence, financialization of savings, and the growing demand for personalized asset management, the market opportunity remains robust. That said, there is also consolidation among undifferentiated players, especially those struggling with performance or scale.